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September 2004, Volume 35, Number 5, Pages 385-406
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Table of contents | Previous| Full text| Next| PDF
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Article |
Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs |
Ram Mudambi1,2 and Pietro Navarra3,4 |
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1Institute of Global Management Studies, Temple University, Philadelphia, USA
2The ISMA Centre, University of Reading, UK
3Institute of Economics and Finance, University of Messina, Italy
4London School of Economics and Political Science, UK
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Correspondence to: Ram Mudambi, Institute of Global Management Studies, Temple C.I.B.E.R., Fox School of Business and Management, Temple University, Philadelphia, PA 19122, USA. Tel: +1 215 204 2099; Fax: +1 215 204 8029; E-mail: ram.mudambi@temple.edu |
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| Abstract |
| In recent years, as multinational corporation (MNC) subsidiaries have become more closely linked to international networks, their knowledge intensity has risen, and some of their R&D has gained a more creative role. Simultaneously, and often connectedly, many subsidiaries have acquired considerable strategic independence in all aspects of their operations, and therefore are able to exercise considerable intra-firm bargaining power to influence the distribution of the firm's resources. In this context, we suggest that intra-MNC knowledge flows are a key determinant of subsidiary bargaining power. We argue that subsidiary managers can exploit such power to pursue their own ends. Such rent-seeking behavior is implicit in much of the literature on managerialism, but our analysis suggests that such behavior can now occur in headquarters-subsidiary and subsidiary-subsidiary relations. Thus subsidiary strategic independence, designed to enhance the competitiveness of outputs (market knowledge) and inputs (asset-seeking and learning), can be corroded when the pursuit of subsidiary objectives encourages rent-seeking. Empirical analysis of a sample of high-technology subsidiaries in the UK provides strong support for the theory. We examine several avenues whereby the incentives of units within the MNC can be aligned.
Journal of International Business Studies (2004) 35, 385-406. doi:10.1057/palgrave.jibs.8400093
Published online 8 July 2004 |
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| Keywords |
| knowledge flows; subsidiary rent-seeking; intra-firm politics |
| Received: 16 January 2003;
revised: 9 December 2003;
accepted: 11 February 2004
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