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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.

As multinational enterprises increasingly disaggregate their value chains and assign functional responsibilities to foreign subsidiaries, they are increasingly focused on augmenting spatially distant activities and resources. At the same time, despite subsidiary managers operating at the “middle” of the organization and having awareness of operational and strategic contexts, they have received significant criticism for hindering the successful coordination and integration of value chain activities. This appears counterintuitive as, on the one hand, MNEs are increasingly disaggregating their value chains and, on the other, subsidiary managers act as frontline managers, at the intersection of their local context and the MNE. We examine the resource stocks of six subsidiaries and the activities of subsidiary managers locally and across global value chains. The results indicate that integration responsibilities are decentralized, as properties of subsidiary mandates, and that the subsidiary managers' connectivity activities significantly affect the strategic influence that they subsidiary can exercise locally and globally. The results also contain important information for policymakers.

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.

The purpose of this paper is to highlight the general environmental constituents (Economic, Technological, Political and Institutional) and businesses networks influence on the offshoring stages in MNCs transferring processes abroad. The literature on offshoring and business networks is polar in acknowledging the role either general environmental constituents or business networks has on the defined stages of offshoring. However the specific influences they have on each other and subsequently on the offshoring stages have remained significantly underdeveloped. The paper seeks to address this issue conceptually and link changes in MNC strategy, structure and activities in the offshoring stages with general environmental constituents and business networks influence. The paper further posits that in many instances the literature considers environmental constituents and business network relationships institute or in their environments but in the four stages of offshoring this is not the case, as the environment partly becomes the stages of the offshoring.

The paper is of a conceptual nature and critically examines and merges literatures to generate insight on the implications of general environmental constituents in home and host markets of offshoring processes and their impact on business network relationships and thus the enhanced influence of these networks on the stages of offshoring. Against this departure it is proposed this will allow for better capture of the related processes involved in the four stages of offshoring and subsequently reflect the internal and external business network relationships influencing the offshoring process. The finding is that the four stages of offshoring are similarly described amongst the literatures and that the influences and activities are very similar within MNC borders. However this changes somewhat when MNCs act outside their borders irrespective of market particularly when focusing on the four stages of offshoring. This paper finds that there are significantly enhanced dependencies between general environmental constituents and business network relationships in the divisional and offshore sites when considering offshoring and subsequently there exist significant implications in the environment and business networks influence for explorative and exploitative behaviour. 

Existent approaches at examining the accelerated offshoring of global firms activities, services and tasks is incomplete, as they do not capture the influence of distance on the stages of offshoring design and the resulting complexity of globally dispersed unit and task interdependencies. Building on the extant offshoring literature and drawing on institutional and geographical views of distance this paper presents propositions on the influence of distance on the configuration of offshoring activities. I posit that present research on offshoring has been mainly goal and outcome orientated and that there is an emerging theme that is starting to consider the design and configuration of offshoring knowledge intensive activities and hidden costs. In this paper I develop a conceptual model of the design of the offshoring stages and the influence of distance on the configuration.

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 process innovation performance. So as to theoretically frame the implications of the organizational reconfigurations and process innovation, brought about by offshoring R&D, this paper 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 paper 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.

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.