Exploring the paradox of competence-creating subsidiaries: balancing bandwidth and dispersion in MNEs

This paper seeks to synthesise the various contributions to the special issue of Long Range Planning on competence-creating subsidiaries (CCS), and identifies avenues for future research. Effective competence-creation through a network of subsidiaries requires an appropriate balance between internal and external embeddedness. There are multiple types of firm-specific advantages (FSAs) essential to achieve this. In addition, wide-bandwidth pathways are needed with collaborators, suppliers, customers as well as internally within the MNE. Paradoxically, there is a natural tendency for bandwidth to shrink as dispersion increases. As distances (technological, organisational, and physical) become greater, there may be decreasing returns to R&D spread. Greater resources for knowledge integration and coordination are needed as intra-MNE and inter-firm R&D cooperation becomes more intensive and extensive. MNEs need to invest in mechanisms to promote wide-bandwidth knowledge flows, without which widely dispersed and networked MNEs can suffer from internal market failures.

Competition and product survival in the UK car market

The paper examines the extent to which inter- and intra-firm competition influenced the survival of cars in the UK market between 1971 and 1998. It is shown that, while competition influenced product survival in all market segments within the UK car market, the nature of that competition differed between them. In the small family and large family car segments, intra-firm competition dominated inter-firm competition. In contrast, in the luxury/sports car segment only inter-firm competition conditions resulted in product survival. Evidence was also found that the luxury/sports car segment has grown more competitive over time and that firms marketing products in the family car segments have become considerably more successful at avoiding the effects of intra-firm competition.

The future of stakeholder management theory: a temporal perspective

We propose adding a temporal dimension to stakeholder management theory, and assess the implications thereof for firm-level competitive advantage. We argue that a firm’s competitive advantage fundamentally depends on its capacity for stakeholder management related, transformational adaptation over time. Our new temporal stakeholder management approach builds upon insights from both the resource-based view (RBV) in strategic management and institutional theory. Stakeholder agendas and their relative salience to the firm evolve over time, a phenomenon well understood in the literature, and requiring what we call level 1 adaptation. However, the dominant direction of stakeholder pressures can also change, namely, from supporting resource heterogeneity at the firm level to fostering industry homogeneity, and vice versa. When dominant stakeholder pressures shift from supporting heterogeneity towards stimulating homogeneity in industry, the firm must engage in level 2 or transformational adaptation. Stakeholders typically provide valuable resources to the firm in an early stage. Without these resources, which foster heterogeneity (in line with RBV thinking), the firm would not exist. At a later stage, stakeholders also contribute to inter-firm homogeneity via isomorphism pressures (in line with institutional theory thinking). Adding a temporal dimension to stakeholder management theory has far reaching implications for this theory’s practical relevance to senior level management in business.

Liability of country foreignness and liability of regional foreignness: their effects on geographic diversification and firm performance

The costs of inter- and intra-regional diversification have been widely discussed in the existing international business literature, but the findings are mixed. Explanations for the mixed findings have important managerial implications, because business managers have to estimate accurately the costs of doing business within and across regions before they make their internationalization decisions. To explain the existing mixed findings, this study differentiates between liabilities of foreignness at the country and regional levels, and explores the joint effects of liability of country foreignness (LCF) and liability of regional foreignness (LRF) on the performance of internationalizing firms. Using data from 167 Canadian firms, we find that LCF may not necessarily be negatively correlated with intra-regional diversification, but LRF is positively correlated with inter-regional diversification. LCF moderates the relationship between LRF and inter-regional diversification, and also mediates the relationship between intra-regional diversification and firm performance. LRF mediates the relationship between inter-regional diversification and firm performance. Missing one or more of these variables may result in different cost estimates. Identification of the relationships between these variables helps to improve the accuracy of estimating the costs of doing business aboard.

The evolution of green leases: towards inter-organizational environmental governance

Improving the environmental performance of non-domestic buildings is a complex and ‘wicked’ problem due to conflicting interests and incentives. This is particularly challenging in tenanted spaces, where landlord and tenant interactions are regulated through leases that traditionally ignore environmental considerations. ‘Green leasing’ is conceptualized as a form of ‘middle-out’ inter-organizational environmental governance that operates between organizations, alongside other drivers. This paper investigates how leases are evolving to become ‘greener’ in the UK and Australia, providing evidence from five varied sources on: (1) UK office and retail leases, (2) UK retail sector energy management, (3) a major UK retailer case study; (4) office leasing in Sydney, and (5) expert interviews on Australian retail leases. With some exceptions, the evidence reveals an increasing trend towards green leases in prime offices in both countries, but not in retail or sub-prime offices. Generally introduced by landlords, adopted green leases contain a variety of ambitions and levels of enforcement. As an evolving form of private–private environmental governance, green leases form a valuable framework for further tenant–landlord cooperation within properties and across portfolios. This increased cohesion could create new opportunities for polycentric governance, particularly at the interface of cities and the property industry.