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Journal of International Business Studies

, Volume 43, Issue 3, pp 219–243 | Cite as

The effects of spatial and contextual factors on headquarters resource allocation to MNE subsidiaries

  • Henrik DellestrandEmail author
  • Philip Kappen
Article

Abstract

Subsidiaries of multinational enterprises are located in a range of environments, in which they are exposed to organizational, national, and sub-national characteristics. Instead of being distributed equally, economic resources are agglomerated in specific countries, or even regions, and the subsidiaries located in these different environments have a heterogeneous resource configuration. This implies that dimensions of space related to geography and subsidiary network relationships may affect how the firm is managed. This paper investigates how spatial and contextual distance within multinational enterprises affects headquarters resource allocation to specific innovation transfer projects between subsidiaries. In brief, the results suggest that sub-national factors, such as the structure of the subsidiary network, offer a strong explanation for headquarters resource allocation. Positive and negative effects of national factors were also found, which implies that distance matters for headquarters resource allocation activities. By integrating the organizational and geographic dimensions, this paper contributes to knowledge about the drivers of headquarters resource allocation to subsidiaries, thereby extending theories related to how subsidiaries can evolve within the multinational enterprise with support from headquarters.

Keywords

multinational corporations (MNCs) and enterprises (MNEs) distance embeddedness resource allocation headquarters–subsidiary roles and relations innovation transfer 

Notes

Acknowledgements

We would like to thank Area Editor Professor Paul Almeida and the three anonymous reviewers for insightful comments and suggestions. All remaining errors are our own. We are grateful to our colleagues from the TIME-research project for data collection. Financial support from Handelsbanken's Research Foundation and the Bank of Sweden Tercentenary Foundation is gratefully acknowledged.

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© Academy of International Business 2012

Authors and Affiliations

  1. 1.Department of Business StudiesUppsala UniversityUppsalaSweden

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