Dual Paths to Performance: The Impact of Global Pressures on MNC Subsidiary Conduct and Performance

Abstract

Over the last decade, the international business literature has placed ever-greater emphasis on the role that learning and innovation play in determining multinational and multinational subsidiary performance. The present research seeks to understand the organizational paths leading to such desirable outcomes as greater learning, increased innovation, and improved performance. Using a model tested with data collected through a survey of managers in subsidiaries of multinational firms, we find dual, independent paths to improved performance-one through networking and inter-unit learning and the second through subsidiary autonomy and innovation. A particular feature of these findings is that they can be shown to be robust after controlling for a wide range of environmental pressures and firm and industry factors. However, in the absence of environmental controls the dual path finding is rejected. These conflicting findings support the imperative to test models that include a diverse range of environmental pressures so that the true effects of organizational factors on learning, innovation, and performance can be identified.

Keywords: Multinational corporations, innovation, subsidiaries, performance

JEL Classification: F23