"MNE R&D in Emerging Markets: Arbitrage, Adaptation & Aggregation in Global Innovation Networks"
Emerging markets, long a source of cheap labor, is increasingly staking its claim to a bigger share of global innovation. We extend Ghemawat’s Arbitrage, Adaptation, and Aggregation (AAA) framework to develop a conceptual model of how MNE’s allocate innovation activities in different markets. We use a 3x3 (nine) nested in-depth case studies of nine European MNEs in three dominant technology sectors, automotive, information and communication technologies, and pharmaceuticals, in India, to develop an evolutionary model of MNE R&D. We identify two distinct trajectories of evolution, one triggered by the product market opportunities, and the other driven by the factor market conditions in emerging markets, the latter one distinctly different from the commonly received view of R&D evolution. Our model unbundles R&D into its constituents, and allows one to consider diverse ways of configuring R&D network for the multinational firm, depending on the AAA configuration that best suits its global strategy as well as the local intellectual property (IP) considerations, as well as the locus of the R&D organization over time. We identify new opportunities for theory development, strategy practice, and public policy for MNE R&D, that goes beyond the exclusive focus on IP regime.
|Journal||Academy of Management Proceedings|
|Publisher||Academy of Management|