Orchestrating Innovation in the Multinational Enterprise Headquarters Involvement in Innovation Transfer Projects

Abstract: In the past several decades research has emphasized innovation development and transfer as key issues when investigating the multinational enterprise (MNE). This thesis focuses on the question of what factors make headquarters involve itself in innovation transfer projects taking place between a sending and a receiving subsidiary within the MNE. This relates to headquarters active participation and role in the organization of resources (structure) and flows (processes) within the MNE.Using a database covering 169 innovation transfer projects the empirical analysis reveals that distances influence headquarters involvement, albeit in different directions. Systematic differences based on subsidiary and innovation characteristics and headquarters involvement is found. Not only subsidiary characteristics are of importance for headquarters involvement, but also the embeddedness of the subsidiary hosting the innovation transfer project.More specifically, physical and cultural distance between the sending and receiving subsidiaries influence headquarters involvement in the transfer negatively, whereas linguistic and economic distance between the subsidiaries conducting the transfer have a positive influence on headquarters involvement in innovation transfer. Looking more closely at the innovations subject to transfer the results suggests that innovations perceived as complex and important are favored for headquarters support. The same is true for innovations that are related to the core business of the subsidiary. At a subsidiary level, powerful subsidiaries initially receive more of headquarters support, but as subsidiary power increase, headquarters becomes less involved, i.e., a curvilinear effect of power is found. Acquired subsidiaries tend to become favored for headquarters involvement in transfer relative to greenfield subsidiaries. Finally, the results indicate that headquarters involves itself in transfer projects when the subsidiaries hosting the transfer projects have been relationally embedded during the innovation development phase.Theoretically, headquarters involvement can be conceptualized as orchestration of innovations within the MNE, and as a form of resource allocation. Thus, this thesis contributes to the understanding of what influences intra-MNE resource allocation, as well as what factors capture the attention of headquarters leading to innovation orchestration. Headquarters involvement in innovation transfer has implications for setting subsidiaries on evolutionary trajectories.