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The emergence of enhancement or depletion of subsidiary charters is driven by two different types of organizational units and the environment. (1) The parent is ultimately responsible for the establishment of subsidiaries and will greatly impact its evolution by involvement. (2) Evolution is also largely contingent on the subsidiary’s choice. (3) The environment is critical in the evolutionary process as changes in the environment will influence the parent and subsidiary in their choices (Birkinshaw, 1996; Birkinshaw and Hood, 1998; Cantwell and Mudambi, 2005). The thesis sets out to investigate the drivers and effects of mandating on subsidiary evolution within the MNE. The departure in this thesis from the literature is its specific focus on how mandates are lost in complex networked Multinational Enterprise’s (MNE) and the effect this has on subsidiary resources and relationship development.

This thesis bases its empirical analysis on data collected from two qualitative rounds of interviews collected in two Swedish multinational enterprises, Alfa and Beta, and 36 of their foreign subsidiaries based in Europe, China, India and N. America. This yielded 112 interviews, the first round of interviews investigates the headquarters drivers of mandating and the network characteristics of mandated subsidiaries. It became apparent during this first round that mandates were lost by subsidiaries quite often and that they continued operating. These counterfactuals informed the second round of interviews, here the focus zooms in on the consequences of the loss of R&D mandates on subsidiary evolution. Specifically, the thesis examines the resource and relationship characteristics of the focal subsidiaries and the impact of mandate loss. 

The study builds on four essays that taken together suggests if the MNE relocates mandates with the purpose of accessing resources, efficiency seeking, or as a response to endogenous and/or exogenous pressures, the process of mandating presents subsidiaries, that are not wound-down, spun-off or closed, with the opportunity and space to evolve its charter. This has far-reaching possible consequences for both the subsidiary and the MNE not least in resource and relationship combinations and orchestration and managing capabilities. Secondly, the thesis calls into question the importance of mandates and that researchers should pay more attention to the formal and informal tenets of mandates i.e. the combinations of mandate relationships and resources. The mandate is a well established indicator of the subsidiaries formal activities and responsibilities, however, it is not indicative of the informal behavior of a subsidiary which in this thesis is shown to be important in equal parts for the subsidiary’s evolution.

Weexaminethe event ofsubsidiary R&D mandate lossand processes that determine a subsidiary’s subsequent evolutionary trajectory. R&D mandates reflect a value adding activity, and the loss of such mandates corresponds to responsibilities being reassigned from a fully-fledged subsidiary. In order to explore what happens to subsidiaries that lose their mandates we make use of exploratory cases that centers on the interplay between the drivers of mandate loss and subsidiaries response postmandate loss. We observe that subsidiaries regularly survive and prosper post mandate loss, unpacking these counterfactuals is the core of the present paper. This allows us to elucidate how a subsidiary can exhibit a positive evolutionary trajectory post mandate loss.

We make two distinct contributions. Firstly, we find that the informal dimensions of the mandates interact with the formal in a maner that facilitates influence over the resource and relationship portfolios that a subsidiary manages and develops. Secondly we findt hat the deployment of a subsidiary’s combining capabilities and slack resources are vestigial post mandate loss and that they are complimentarty to the freed-up resources post loss, allowing positive trajectories.

This paper submits that research on offshoring of R&D has focused mostly on the empirical phenomenon’s under-lying offshoring’s strategic drivers and less on extending our understanding of how the MNC reconfiguration impacts operational performance and process innovation performance. So as to theoretically frame the implications of the organizational reconfigurations and process innovation, brought about by offshoring R&D, this proposal centres on the interplay between interfaces, interdependencies and distance. Offshoring of R&D requires global reconfigurations, which in turn strain coordination due to boundary changes, and distance (in this proposal geographic and institutional distance). This increases the complexity placed on the global division and coordination of R&D activities and subsequently process innovations and calls for further investigation of organizational reconfigurations.