This thesis explores heterogeneity of subsidiary’s innovative activity in a multinational company (MNC). The role of national entities of MNCs has received increasing attention by researchers and policy makers due to the changing role of MNCs, regarding innovation activity at national level. A substantial portion of innovative activity in industrialized
economies is now carried out by MNCs (Isaksen 1997 p. v). Thus, there is a clear tendency of MNCs to progressively fragment its value-chain activities, including research and
development, across the regions in which it operates (Narula and Guimon 2009). Due to industry and firm structure, in addition to the specific social and cultural conditions, innovation occurs differently in different regions (Isaksen 1997 p. v). It therefore becomes valuable to understand how innovation takes place in subsidiaries operating in different regions, which this thesis is set out to do.
The purpose of this thesis is to uncover heterogeneity in innovative activities across
subsidiaries in Telenor Group, and to understand the implications heterogeneity might have for innovation management. A case study approach will be used to examine three separate subsidiaries of Telenor Group - Telenor Pakistan, Telenor Bulgaria and Canal Digital AS (Telenor Broadcast). Telenor Group is a major telecommunication operator company, with operations across the Nordic countries, Europe and Asia. The subsidiaries of Telenor Group are highly geographically dispersed, operating in markets characterised by varying cultural, economic and political conditions. Due to the heterogeneity of markets this MNC operates in, and a high degree of local autonomy in Telenor Group subsidiaries, it is interesting to
examine heterogeneity of innovative activity across Telenor Group subsidiaries. In order to study heterogeneity of innovation, it is also central to understand what innovation in a MNC is. Consequently there are three research questions set for this thesis:
1. What characterises innovation in a MNC?
2. How and why does innovative activities vary across subsidiaries within the same MNC?
3. What are the implications of inter-subsidiary variations with regards to being an innovative MNC?
Heterogeneity of innovative activity is an issue in the literature concerning innovation in MNCs. However, a large part of previous research has focused on patterns particular to specific industries, not differentiation patterns within corporations (Marin and Bell 2005).
This thesis is based on two streams of literature, which may explain the characteristics of innovation in MNCs, inter-subsidiary heterogeneity of innovative activity and the potential implications it may cause.
Ghoshal and Bartlett (1988) suggest that innovation in MNCs is characterised by the innovation tasks of creation, adoption and diffusion. Heterogeneity of innovative activity is caused by variations on the organizational attributes of normative integration, density of internal communication, degree of local slack resources and local autonomy. The implications of inter-subsidiary heterogeneity from this stream of literature are suggested to be difficulties of implementing and enforcing a common strategic direction for MNCs subsidiaries.
Furthermore, inter-subsidiary heterogeneity may make is more challenging for a MNC to enforce control mechanisms, such as normative integration, associated with higher levels of innovation (Ghoshal and Bartlett 1988).
Moreover, Marin and Bell (2010) suggests that innovation in MNCs are characterised by subsidiaries varying degrees of global integration and local responsiveness in a MNC. These variations affect the level innovative activities of the subsidiaries. The implications of varying degrees of global integration and local responsiveness may be an unequal balance between cost-efficiency and level of innovation in the subsidiaries.
The theoretical contribution to this field of study is to illuminate and better understand
heterogeneity of innovative activity of the subsidiaries within one MNC. A further theoretical contribution toward is the literature concerning (innovation) management and MNCs. This thesis offers insight related to how innovation is carried out in different Telenor Group subsidiaries, and the implications for innovation management. This may contribute to an understanding of how corporate strategies and decision-making affect innovative activity at subsidiary level and vice versa.
This thesis also contributes to an academic debate concerning whether it is possible for a subsidiary to have a high level of global integration and a high level of local responsiveness.
This is argued by some researchers (Peng 2009; Verbeke 2009) to be somewhat idealistic, by
claiming that in reality a MNC will have to make a choice between the two. This thesis will contribute to this debate by examining to whether Telenor Group subsidiaries only adhere of one of the dimensions, or if the subsidiaries may have a high level of both.
To answer the research questions this thesis is organized as follows:
In chapter two I will elaborate on the theoretical aspects I have chosen to focus on in
answering the research questions, based on literature of innovation and literature concerning innovation in MNCs. This chapter will discuss what the literature identifies as characteristics of innovation in MNCs, and further how existing literature explain heterogeneity of
innovative activity. Lastly, this chapter will explore what implications inter-subsidiary variation of innovative activity may have for a MNC.
In chapter three the methodology and data will be described. It discusses the mixed method research design, and how both quantitative and qualitative data has been collected and analysed to answer the research questions.
In chapter four present the empirical findings from both the quantitative and qualitative approaches, and further relate it to the theoretical framework outlined in chapter two.
Finally, chapter five answers and the research questions, and thereby concludes the
quantitative and qualitative findings, before discussing theoretical contributions, and research – and policy implications are offered.