Contribution of MNCs to subsidiary stakeholders

The international business literature has evolved from addressing the question of how MNCs are more efficient organizations for exploiting innovations globally – to the issue of how MNCs are more effective in creating new products, processes and technologies worldwide. However, the question of how MNCs contribute to, and share benefits with, the host country stakeholders has received little attention in the literature. Our research shows that the contribution of MNCs to the subsidiary company and country stakeholders in the form of R&D, exports and royalty earnings is significantly less than expected. Insufficient compensation to local subsidiary stakeholders may undermine the motivation of subsidiary managers to discover new sources of advantage for the MNC. It may also discourage subsidiary country governments from offering incentives to MNCs for inward FDI.