Research and development resilience of foreign MNE subsidiaries during the Great Recession
Foreign subsidiaries sustain R&D in downturns through parent-derived buffering resources and locally embedded knowledge from cooperation and exploration.
Summary
The study asks why some foreign subsidiaries of multinationals kept up their R&D through the Great Recession, and finds two sources of resilience. One is corporate: the advantages of belonging to a multinational, such as resources from the parent that buffer the subsidiary. The other is local: capabilities the subsidiary built itself through external cooperation and exploratory activity. The authors conclude that leaders should prioritise subsidiaries that are strategically important but financially constrained.
Editor's opinion
Subsidiary R&D survives a downturn when it has two things: a parent that can buffer it with resources and a set of local partnerships and exploratory projects of its own. In a crisis, headquarters should protect the strategically important subsidiaries that are short of funds, since the parent's buffer is what lets them keep innovating.
Key concepts
R&D resilience · MNE subsidiaries · recession · embedded knowledge