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Foreign Ownership and Subsidiary Performance: Impact on Research and Exports?

In the mainstream international management literature the issue of the extent to which multinational corporations achieve the outcomes desired by host country stakeholders is yet to receive the attention it deserves. This paper shows that the contribution of mncs in the form of exports and royalties is significantly lower than that of local firms. Insufficient attention to local subsidiary interests may undermine the motivation of subsidiary managers to discover new sources of advantage for the mncs. It may also discourage subsidiary country governments from offering incentives to mncs for inward foreign direct investment.

REVIEW OF INDUSTRY AND MANAGEMENTEconomic & Political Weekly EPW september 27, 200857Foreign Ownership and Subsidiary Performance: Impact on Research and Exports?Pradeep K Ray, Sunil VenaikMultinational corporations (MNCs) can be studied from three broad perspectives – from the perspective of the MNC parent, from the viewpoint of the overall MNC network and from the standpoint of one or more MNC subsidiaries. In the past few decades, the studies on MNCs have evolved from the perspective of the MNC parent to the perspec-tive of theMNC network. However, there is little research on the activities ofMNCs from the third perspective – that of the subsidiary company and the country where the subsidiary is located. This paper fills this gap in the literature. It examines how foreign ownership influences subsidiary performance of research and development (R&D), exports and royalty outflows. Understanding the impact of MNCs from the host country perspective will help in designing policies and strategies that enhance convergence and reduce conflicts among diverse stake-holders of MNCs.The earlier view of MNCs – the main channels of foreign direct investment (FDI) – was founded largely on the internalisation theory. That is, MNCs are more efficient than market mechanisms in transferring knowledge and innovations generated within a firm [Buckley and Casson 1991; Caves 1996]. Innovations were first created byMNCs in developed countries and exploited and appropriated progressively in other developed and developing countries [Vernon 1966]. Dunning’s (1988) ownership, location and internalisation (OLI) framework enriched the rationale for FDI by supplementing the internalisation and ownership-based explanation with the additional dimension of location-based advantages of the host country.MNCs chose foreign locations to market their products and services, to source raw materials and finished products, and/or to create new advantages that the firm exploited in other markets around the globe. The subsidiary and the host country were viewed mainly as mechanisms for inter-nalising the location specific externalities in the parent, and creating competitive advantage for the MNC’s global network. There was little interest in understanding and fulfilling the needs of the MNC subsidiary’s local stakeholders, beyond limited product and marketing adaptation. In other words, the perspec-tive continued to beMNC-parent centric.The new literature on MNCs looks at multinational firms from the second perspective of the overall MNC network, and focuses on differentiated roles and responsibilities for the MNC subsidi-aries [Bartlett and Ghoshal 1986; Gupta and Govindarajan 1994; Birkinshaw and Morrison 1995; Venaik et al 2005]. Instead of regardingMNC subsidiaries as a uniform, homogeneous, isomor-phic system, it emphasises differentiation among the subsidiaries We would like to express our sincerest thanks to the anonymous reviewer for his/her insightful feedback on this paper. Pradeep K Ray (pray@unsw.edu.au) is at the University of New South Wales, Sydney, Australia. Sunil Venaik (svenaik@business.uq.edu.au) is at the UQ Business School, University of Queensland, Brisbane, Australia.In the mainstream international management literature the issue of the extent to which multinational corporations achieve the outcomes desired by host country stakeholders is yet to receive the attention it deserves. This paper shows that the contribution of MNCs in the form of exports and royalties is significantly lower than that of local firms. Insufficient attention to local subsidiary interests may undermine the motivation of subsidiary managers to discover new sources of advantage for the MNCS. It may also discourage subsidiary country governments from offering incentives toMNCs for inward foreign direct investment.
REVIEW OF INDUSTRY AND MANAGEMENTseptember 27, 2008 EPW Economic & Political Weekly58in theMNC network, dictated by the environmental context of each subsidiary. Based on their differentiated roles and responsi-bilities, subsidiaries are classified variously as autonomous, implementers, receptors, contributors or strategic leaders with world mandates [Taggart 1997]. Whereas the new literature on MNCs addresses issues at a finer level of the subsidiaries, the focus of attention continues to be the performance of the MNC network as a whole, rather than that of the individual subsidiaries within the MNC system. In particular, it falls short of examining how subsidiary activities impact on the stakeholders in the host country and ignores any potential differ-ences that may arise between nation states, insofar as how they diverge in their goals and objectives. For example, government expectations from a subsidiary located in a developed country such as Ireland may be quite different from a subsidiary located in a developing country such as India.In a developed country, the spillover benefits from mnc subsidiaries are usually sufficient to justify incentives for inward FDI. In the case of developing countries, however, there are often additional expectations from and require-ments for MNC subsidiaries to also provide more direct benefitsin the form ofR&D, exports and royalty earnings [Kumar 1996; von Dijck and Rao 1994]. It is therefore important to study MNC subsidiaries not only from the perspective of the MNC parent and that of the overall MNC network, but also from the perspec-tive of theMNC subsidiary and the host country in particular.Moreover, whereas externality related benefits of FDI are well-recognised and studied extensively [e g, Aitken and Harrison 1999; Moran et al 2005; Smeets 2008], there is relatively little research on the direct cost-benefits of FDI in the form ofR&D conducted in, or exports achieved byMNC subsidiaries. The volume of empirical research on R&D activities ofMNCs in developing countries is also scant, especially when compared to the large amount of research on the globalisation of R&D byMNCs among developed countries [e g, Asakawa 2001; Fisch 2003]. Today, developing countries are actively encouraging inwardFDI in the hope of boosting the linkages spawned byMNCs across a range of value creating activities, including R&D, manufacturing, marketing, overall business organisation and management [Lall 1996; Cantwell and Narula 2003: 8]. MNC subsidiaries are being counted on to contribute directly to national development priori-ties in the form of greaterR&D intensity, higher exports and lower foreign exchange outflows on account of royalties and licence fee payments [Ray 2004; Ray and Venaik 2004; von Dijck and Rao 1994]. Indeed, multinational firms are often treated more favour-ably than the domestic enterprises in the hope that their high R&D, export and patenting intensity will dynamise the local economy and promote faster economic growth by inserting it into the transnational economic network [Javorcik and Spatareanu 2005: 45; UNCTAD op cit: 103]. Whereas higherR&D intensity potentially creates faster innovations, strong export-orienta-tion disciplines local industries and prevents technological sloth [Lall 1996]. Moreover, in the new knowledge economy, whoever owns the rights to new intellectual property (patents) embodyinganinnovation, potentially controls the “nerve centre” ofcompetitiveadvantage in global competition. In sum, host country stakeholders expect foreign ownership to have a favourable impact onlocalR&D and exports, while at the same time,reduceabnormal outflows of capital in the form of royalty payments by the local subsidiary. It is with this hope that policy-makers are scaling up various incentives to MNCs such as tax holidays, R&D subsidies and export credits. However, the benefits of such incentives are far from clear. The objective of this paper therefore is to examine the effect of foreign ownership on local R&D and foreign exchange flows arising from exports and royalties paid by the firm, and its impli-cations for the host country. The paper is organised as follows. The next section presents the theory and empirical evidence as background to our study. This is followed by a discussion of the methodology used for data collection and analysis. Finally, the paper presents the results of our research and conclusions. In what follows, we provide a more nuanced explanation of why foreign ownership is sometimes expected to have a positive impact on subsi-diaryR&D, exports and royalty payments in particular, invoking extant empirical literature. We also provide an explanation of the circumstances under which this is not likely to transpire and why.Theory and Empirical EvidenceThe following sections discuss the theory and empirical evidence on the impact on R&D, exports and royalty performance.1.1 Impact on R&DEarlier, multinational firms conducted R&D largely in the corpo-rate headquarters [Caves 1996]. However, with increasing diffi-culty of headquarter-based R&D teams to understand consumer preferences in the subsidiary markets,MNCs began to locate some of their R&D activities in the subsidiaries [Jarillo and Martinez 1990], focusing largely on product adaptations to suit local customer needs and preferences [UNCTAD 2005: 119]. More recently, MNCs are increasingly conducting criticalR&D in the subsidiaries to absorb and assimilate knowledge from the univer-sities and research labs in host countries and thereby augment their existing firm-specific ‘O’ (ownership) advantages [Birkin-shaw et al 2006; Cantwell and Narula 2003: 4]. Thus, the internationalisation of R&D is being motivated by one or more of the three demand and supply factors: the need for local adaptation of foreign products and production processes, location-specific cost advantages in the supply of human capital assets and labour, and the localised knowledge spillovers in countries that are different from, or more advanced than the home country of the MNC in specific fields [Kumar 2001]. The traditional centralised R&D structure is progressively being replaced by the emergence of a transnationalR&D network which taps into new knowledge and research produced by universities and competitors across the world [Teigland et al 2000]. The increasing scale of national technological effort in many newly industrialising countries is also favouring the relocation ofR&D efforts of foreign MNCs to these countries [Kumar 2001; Pearce and Singh 1992]. For example, in the area of human-capital inten-sive information and communication technologies, MNCs are conducting R&D in countries such as India, China and east European nations that have a large pool of low-cost and high quality scientists and engineers [UNCTAD op cit: 119]. As a result,
REVIEW OF INDUSTRY AND MANAGEMENTEconomic & Political Weekly EPW september 27, 200859MNCs’R&D activities in developing countries are evolving from simple adaptation for local markets to the creation of new products and processes for world markets (ibid: 119). Indeed, over 100 foreign MNCs across a wide range of industries have estab-lished R&D centres in India – these include large, well known firms such as Astra-Zeneca, Daimler-Benz, Intel, Microsoft, Motorola, etc (ibid: 167). Empirical studies in countries such as Turkey have found that MNC subsidiaries have higherR&D inten-sity than domestic firms [Erdilek 2005: 120]. Overall, an increase in foreign ownership stimulates local technological effort both for absorption and adaptation of foreign knowledge, and for the creation of new knowledge locally [Aggarwal 2000; Siddhartan and Safarian 1997]. Equally however, rapid globalisation and liberalisation of markets motivate MNCs not to make significant adaptations or generate wholly new innovations for the local markets. Even if they do make adaptations, these either need littleR&D or the adaptive R&D may be conducted outside of the host country. Another possibility is an absence of R&D mandate for the subsidiary, which would result in lower R&D locally in compari-son with that in the parent-MNC [e g, Birkinshaw et al 1998]. There may also be downsizing of local R&D ifFDI involves acqui-sition of a domestic firm followed by transfer of R&D mandate to other parts of the MNC network [UNCTAD op cit: xxix], since “innovative corporate activity as measured by patents is still predominantly located close to the firm’s headquarters” [OECD 1999 in Erdilek 2005: 109]. It is therefore by no means axiomatic that foreign ownership will automatically engender subsidiaryR&D. In the absence of detailed empirical evidence, such expectations may be somewhat ill-advised to harbour [see Ray and Rahman 2006 for a recent survey].1.2 Impact on ExportsTypically, FDI is acknowledged to boost exports, since MNCs possess greater ability to export vis-à-vis domestic firms due to their vastly superior ownership-specific advantages and connec-tion to global markets. Moss et al (2005: 356) have found that the export to output ratio for foreign firms was three times as high as that for domestic firms. The higher export intensity of MNCs may either be due to intra-firm trade within its network of subsidiaries worldwide, or it may take the form of inter-firm trade with foreign firms that have linkages with theMNCs. Exporting is also likely to be higher if the subsidiary is granted a global export mandate by the multinational firm [Birkinshaw et al 1998]. During the pre-World Trade Organisation (WTO) era, developing countries directedMNC subsidiaries to enhance the level of exports from the host country [Long 2005: 321]. In the post-WTO global economy, government mandates have been replaced with generous tax and tariff concessions, export incentives andR&D subsidies – in order to enticeMNC subsidiaries to voluntarily achieve government’s export objec-tives [Lawrence 2005: 370]. Even so, foreign owned firms may be less export-oriented, if the MNC pursues a market-seeking “multidomestic” strategy; if the host country lacks the knowledge and skills required to add value to imported intermediate goods; or if it restricts imports of intermediate inputs for processing in the country [Melitz 2005: 275]. In the incidence of these three conditions, we are unlikely to see any positive impact of foreign ownership on subsidiary exports [Ray 2005]. Therefore, the impact of foreign ownership on exports cannot be uniquely predicted.1.3 Impact on Royalty PaymentsMNCs increasingly use their subsidiaries to create new knowledge that can be exploited by the MNC’s worldwide network [Bartlett and Ghoshal 1986; Birkinshaw et al 1998]. Previous research by Roth and Morrison (1990) and Holm and Pedersen (2000) on ‘World-mandated Subsidiaries’ and ‘Centres of Excellence’ indicates that the former class has responsibility to develop entirely new product lines and innovations, whereas the latter class conducts both basic and applied research for product devel-opment. If the subsidiary that creates new knowledge is assigned the patent for invention, there will be no need for the subsidiary to license in the technology from the parent company and pay fees and royalties to the parent for the imported technology. If anything, foreignR&D may generate reverse technology transfer and positive spillover effects on the home economy of the MNC [UNCTAD op cit: 179]. If some of these benefits are shared with the subsidiary which is the source of this new technology, it will result in a positive inflow of royalty payments from the MNC-parent to the subsidiary or a negative outflow of royalty payments from the subsidiary. However, a more careful reading of recent empirical literature provides some interesting but contrary findings – which should perhaps be a sobering reminder of the many pitfalls of being overtly eager to attract FDI. For example,UNCTAD (op cit: 135) reports “a large share of all patents granted to inventors in developing economies is assigned abroad, notably TNCs”. From 2001-03, the United States Patent and Trademark Office granted 1,022 patents to residents in India. Of these, 611 patents were granted to domestic-owned entities and 411 to foreign-owned entities. Of the latter, 409 patents were assigned to foreign institutions and only two patents were assigned to foreign affiliates in India [UNCTAD op cit: 135-36, emphasis added]. Since the “assignee becomes the legal owner of the patent” [UNCTAD op cit: 134], the transfer of patent rights from the MNC subsidiary to the parent may deprive the opportunity for MNC subsidiaries to earn royalties from its inventions. Hence, we cannot uniquely predict the impact of foreign ownership on royalty payments.To sum up, we explore the effect of foreign ownership on three key variables of interest to host country stakeholders, namely, R&D, exports and royalty payments. However, due to the diver-sity and complexity of MNC organisation and the factors influenc-ing the distribution of roles and responsibilities among MNC’s globally dispersed units, it is difficult to predict unequivocally the direction of these relationships based on extant theoretical and empirical literature reviewed above. In other words, it is plausible that domestic firms can achieve equal or superior levels of performance on R&D, exports and royalties vis-à-vis MNC subsidiaries. Our aim, therefore, is to empirically explore

After cleaning the dataset of outliers

REVIEW OF INDUSTRY AND MANAGEMENTEconomic & Political Weekly EPW september 27, 200861stronger intellectual property rights (IPR) protection in develop-ing countries encouragesMNCs to transfer advanced technology directly to the local subsidiary from the MNC’s global network, obviating the need for significant levels of local R&D [Maskus 2000]. The recent increase inR&D byMNCs in developing countries may also have started from a very low base, only just reaching the R&D intensity of domestic enterprises. Even thoughanecdotal evidence points towards increasingR&D inMNC subsidiaries in developing countries [UNCTAD op cit: 119], our results suggest that it will be a long time before the levelofR&D inMNC subsidi-aries in India will reach the level in the developed world. A finding of some interest here is that foreign ownership has a significant negative impact on exports. There are several plausi-ble explanations for the contrary findings. One straightforward explanation is that since foreign ownership does not have a significant positive effect on R&D, MNC subsidiaries are unlikely to be competitive in exporting intermediate and final products to foreign markets. Under this assumption, however, the effect of foreign ownership on exports should have been non-significant, rather than negative. The second plausible explanation is the motivation for FDI. Although foreign-owned firms have greater export capability in general, the level of exports actually realised byMNC subsidiaries in a foreign market depends on a complex interaction between the MNC parent’s objectives in the host country and the latter’s institutional environment. Foreign-owned firms may be less export-oriented, if theMNC pursues a market-seeking “multidomestic” strategy, which does not espouse an export-orientation [Porter 1986]; or if host governments restrict imports of intermediate inputs for export processing [Melitz 2005: 275]. We believe that the former explanation is more plausi-ble, given that mostFDI in India appear to be “market-seeking” rather than “efficiency or export-seeking” [Dunning 1998].The third and final result shows that foreign ownership has a significant positive effect on royalty payments – contrary to one’s expectations that superior technology generation inMNC subsidi-aries translates into higher royalty inflows, not outflows. Once again, the increase in royalty payments may be due to a higher level of technology transfer from the MNC’s global network to the subsidiary for a fee [Erdilek 2005: 120; Long 2005: 329]. The experience of Africa in this regard is similar, i e,FDI becoming a drain on foreign exchange due to increasing material imports and profit remittances [Chudnovsky and Lopez 2002].What is the significance of this last result? Royalties and licence fees may be used byMNCs to transfer profits abroad, especially from the countries that strictly monitor and/or regulate profit repatriation by subsidiaries to their foreign parent. Although the subsidiary incurs all of the expenses associated withR&D invest-ment, it is unable to appropriate the resulting intrafirm rents. Hence, the incentives for managers inMNC-subsidiaries to invest in R&D, especially in the form of non-specific research, will decrease [Argyres and Silverman 2004]. Lower profitability from royalty repatriation will thus cut dividends earned by subsidiary stakeholders, and diminish rewards for executives whose compensation may be linked to subsidiary performance. Moreover, if the technology supplied by the MNC parent is costlier than that available in the host country market, it would adversely affect the profit performance of the subsidiary (through higher royalty outflows). If the subsidiary is constrained by the MNC-parent from exploring more efficient alternative sources for its technology needs locally or globally, it may undermine the motivation of the local subsidiary managers to develop more efficient technologies locally. Low profits may inhibit the emergence of domestic competitors, and reduce the choice for local consumers [Hymer 1970; Lall 1973]. Ironically, in this instance, lower profitability of MNC subsidiaries does not imply more competitive and efficient industries, but reflects the subsidiary’s debility from high outflows of royalties and licence fees. Do these findings portend additional adverse consequences for policymakers in particular? Prima facie, transferring profits via royalties and licence fees reduces the taxes payable by the subsi-diary in the country in which it is domiciled [Lall 1973]. Tax revenues finance investments in technical and scientific educa-tion, and sponsor expenditures on R&D subsidies; these need to have an economic return, or else, governments will be unable to fund such expenditures in the future. In sum, transference of profits via royalties and licence fees to the MNC parent has an adverse impact on the performance of the subsidiary and on the benefits available to the local stakeholders of the subsidiary. Thus, any assessment regarding the extent of spillover benefits of MNCs needs to be conducted ex post, and in line with the actual empirical evidence, not on some ex ante cost-benefit analysis. ConclusionsThis paper looks at MNC subsidiary activities from the alternative perspective of local subsidiary stakeholders, to complement exist-ing research on MNC subsidiaries that is undertaken largely from MNC-parent andMNC-network centric perspectives. It suggests that theMNC subsidiaries in India make relatively weak contribu-tion to host-country welfare vis-à-vis local firms in terms of their R&D and export intensities, and have a higher level of royalty outflows. The insignificant impact of foreign ownership onR&D intensity is contrary to popular perception that MNC subsidiaries confer greater positive externalities for the local economy in any circumstance, than their “less illustrious” domestic counterparts. The results indicate that MNC subsidiaries do not seem to achieve the level of knowledge creation and intellectual property genera-tion sought by local subsidiary stakeholders. If subsidiaries conduct low levels of R&D locally, both the direct benefits from the innovations that could be created locally and the indirect benefits from spillovers and externalities that could have been generated, would not be forthcoming. In addition, foreign ownership has a significant negative effect on exports and a significant positive effect on royalty payments. Thus, whereas earlier findings on externality related benefits of FDI are inconclusive [Javorcik and Spatareanu 2005: 70], our research shows that the direct benefits of FDI in the form of export dynamism byMNC subsidiaries are illusory. This carries signifi-cant managerial and public policy implications. The country’s regulatory authorities may grow sceptical about the benefits of FDI for the local economy.MNCs may be regarded as institutions that retard rather than enhance opportunities for the country to “internalise” [Ozawa and Castello 2004] the gains from R&D
REVIEW OF INDUSTRY AND MANAGEMENTseptember 27, 2008 EPW Economic & Political Weekly62Peerless AdD
REVIEW OF INDUSTRY AND MANAGEMENTEconomic & Political Weekly EPW september 27, 200863ouble Spread
REVIEW OF INDUSTRY AND MANAGEMENTseptember 27, 2008 EPW Economic & Political Weekly64carried out within the country’s borders with the support of nation’s private and public resources. Governments may also be impelled to withdraw incentives offered to MNCs to set up opera-tions in the country, or enforce mandatory levels of local R&D and exports and limits on foreign royalty payments. What is more, low levels of subsidiaryR&D will provide fewer opportunities for talented subsidiary managers to engage in innovative activities locally, and to gain professional recognition within the firm by virtue of their new discoveries. It will also weaken their ability to compete with their global peers for high level subsidiary roles and resources.Overall, there may be an increasing support for the view that “the escalation of incentives and subsidies offered to inter-national corporations by both developed and developing countries needs to be capped, and brought under multilateral discipline to maximise the benefits that flow from investor opera-tions” [Birdsall and Bergsten 2005: xiii]. Increasing regulations will enhance governance costs for both policymakers and MNCs, resulting in a loss of potential opportunity for both the MNC and the host country to benefit from each other’s unique advantages. We do not claim that these possibilities are inevitable, but they do seem plausible given the empirical evidence. Finally, if foreign investors can borrow from the host country’s credit resources at interest rates that are often negative in real terms, make profits sheltered behind high effective rates of protection, benefit from tax holidays and import duty exemp-tions, use ultra-low cost but highly skilled human resources in the host country and remit profits at overvalued exchange rates, serious doubts arise as to the net benefits to the host country from MNC activity [Berkowitz and Kotowitz 1982]. Yet, it is well beyond the power of countries to stop intellectual property to be trans-mitted across-borders, especially in an era of rapid globalisation. What they could do however is to spruce up their own national technological prowess, by creating an institutional structure for capability development in their national firms and increasing the spillovers from public R&D. Our research has a few limitations that need to be addressed in future research. First is the issue of sample context. We conducted our research with data from India for three industries – automotive, chemical and electronics. To enhance the generalisability of our findings, the relationships need to be tested with data from subsidiaries operating in other industries and located in other developed and developing countries. Second is the issue of research methodology and construct measures. We collected data from secondary sources and used objective measures to measure each construct. In future, secondary data could be supplemented with primary survey data using multiple perceptual measures to capture the broad domain of each construct in the model. Finally, case studies are needed to get more in-depth understanding of the complex relationship betweenMNC and its subsidiaries in terms of interunit flows of products, knowledge and information, and sharing of benefits among the members of the MNC network.To conclude, we believe our paper makes three valuable contri-butions to the literature. First, it extends the literature by examin-ing the phenomena of knowledge creation and R&D activities in MNC subsidiaries from a new perspective of the subsidiary company stakeholders. Looking at subsidiary activities from the dual lens of both the globalMNC network and the local subsidiary network will enable MNCs to develop strategies that optimally balance the often conflicting objectives of these two stakeholder groups. Second, the study reports that foreign-owned firms do not have higherR&D intensity, do not export more and have higher royalty outflows than their domestic counterparts. The lesson for any host country is that the governments should reduce their expectations on how muchMNCs can contribute to the local economy. That is not to deny that there are many positive exter-nalities ofMNC operations in host countries, with their ownership advantages (a private good), contributing knowledge to and interacting with the host country’s locational advantage (a public good) in a virtuous cycle of innovation and renewal. In the ultimate analysis, what matters is whether the positive externali-ties balance up with the negative ones. Finally, from a subsidiary management standpoint, inadequate sharing of high-level roles and rewards among the MNC subsidi-aries will diminish the ability of subsidiaries to attract, motivate and retain talented employees, ultimately underminingMNC’s competitive advantage locally and globally. It is, therefore, criti-cal that local and global imperatives are considered simultane-ously both in the management of MNC subsidiaries and in the sharing of benefits among the country units. Whereas the former is a recurring theme in the literature, our paper brings to the fore the issue of sharing benefits equitably between the headquarters and subsidiaries and among the diverse host-country units of multinational firms. ReferencesAggarwal, A (2000): ‘Deregulation, Technology Imports and In-house R&D Efforts: An Analysis of the Indian Experience’,ResearchPolicy, 29(9), pp 1081-93.Aitken, B J and A E Harrison (1999): ‘Do Domestic Firms Benefit from Foreign Direct Investment? Evidence from Venezuela’,America Economic Review, 89(3), pp 605-18.Argyres, N and B Silverman (2004): ‘R&D, Organisa-tion Structure and the Development of Corporate Technological Knowledge’,Strategic Management Journal, 25, pp 929-59.Asakawa, K (2001): ‘Organisational Tension in Inter-national R&D Management: The Case of Japanese Firms’,Research Policy, 30, pp 735-57.ATKearney (2005): A CII-ATKearney Survey, http://economictimes.indiatimes.com/articleshow/1325008.cms, accessed December 9.Bartlett, C A and S Ghoshal (1986): ‘Tap Your Subsidi-aries for Global Reach’, Harvard Business Review, November-December, pp 87-94.Berkowitz, Michael K and Yehuda Kotowitz (1982): ‘Patent Policy in an Open Economy’,Canadian Journal of Economics, Vol 15(1), pp 1-17.Birdsall, N and C F Bergsten (2005): ‘Preface’ in T H Moran, E M Graham and M Blomstrom (eds), Does Foreign Direct Investment Promote Develop-ment? Institute for International Economics, Washington DC, pp xi-xiv.Birkinshaw, J and A Morrison (1995): ‘Configurations of Strategy and Structure in Subsidiaries of Multi-national Corporations’,Journal of International Business Studies, 26(4), pp 729-53. Birkinshaw, J, N Hood and S Jonsson (1998): ‘Building Firm-Specific Advantages in Multinational Corpo-rations: The Role of Subsidiary Initiative’,Strategic Management Journal, 19(3), pp 221-41.Birkinshaw, J, C Bouquet and T Ambos (2006): ‘Attention HQ’,Business Strategy Review, Autumn, pp 4-9.Buckley, P J and M Casson (1991): The Future of Multi-national Enterprise, Macmillan, London (2nd edition). Cantwell, J and R Narula (eds) (2003): International Business and the Eclectic Paradigm, Routledge, London, pp 1-24.Caves, R E (1974): ‘Industrial Organisation’ in J H Dunning (ed), Economic Analysis and the Multinational Enterprise, Allen and Unwin, Surrey, pp 89-114.

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